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Homework answers / question archive / Find the future value of an annuity due consisting of payments of $100 paid at the beginning of each quarter for five years at the rate of 5% compounded quarterly
Find the future value of an annuity due consisting of payments of $100 paid at the beginning of each quarter for five years at the rate of 5% compounded quarterly. (Round your answer to nearest Dollar) $2,300 $2.325 c) 52,370 d $2.285 $2,315
Quarterly rate = 5% / 4 = 1.25%
Number of periods = 5 * 4 = 20
Future value = (1 + rate) * Annuity * [(1 + rate)^periods - 1] / rate
Future value = (1 + 0.0125) * 100 * [(1 + 0.0125)^20 - 1] / 0.0125
Future value = 1.0125 * 100 * [1.28204 - 1] / 0.0125
Future value = 1.0125 * 100 * 22.56298
Future value = $2,285
